The contracts signed by international oil companies jockeying for a stake in the vast oil resources in Iraq are illegal, a lawmaker said. A small group of lawmakers in Iraq protested the series of deals awarded to BP, Exxon Mobil and other international oil majors to explore southern oil reserves, The Wall Street Journal reported. A national hydrocarbon law is stalled currently in Parliament. Recent contracts handed out to oil majors are limited to service deals to get around the legislative obstacle.
Nevertheless, Noor Adin al-Hadyi, a lawmaker on the oil and gas committee, protested the deals because they did not get parliamentary approval. “This is a warning to the companies that the contracts they signed are illegal,” he told reporters, adding the issue could be headed for the courts. His objection is not expected to thwart the flood of oil deals developing in Iraq, though it might create political uncertainty for oil companies as Iraq looks to enhance oil and gas activity, the Journal noted. Iraq held its first post-war oil auction in June, though government provisions and security kept most bidders away. A second round is scheduled for December 10.
The consortium of oil companies led by Exxon Mobil on 5 November signed the contract to develop one of Iraq’s largest oil fields. The consortium, which also includes Royal Dutch Shell, agreed to boost production from West Qurna oil field from its current level of 160,000 barrels per day (bpd) to 2.325 million bpd over the course of its 20-year contract, Oil Ministry spokesman Assim Jihad was quoted as saying by the press. Jihad said Exxon and Shell’s offer to boost production so significantly had helped it beat Russian energy giant LUKoil in bidding for the contract, which began last June.  The deal is the second major oil contract to be awarded to an international consortium two weeks ago. On 3 November, a consortium led by British Petroleum (BP) and China’s CNPC became the first international group to finalize an oil contract with the Iraqi government since Iraq nationalized its country’s petroleum resources in 1972.